Nepal’s Financial Intelligence Unit (FIU) has raised alarms over the growing use of cryptocurrencies in cyber-related frauds despite an official ban on crypto trading.
The FIU is a division of the Asian country’s central bank, Nepal Rastra Bank, and it focuses on monitoring and combating financial crimes such as money laundering and terrorist financing. In its Strategic Analysis Report released on November 18, the unit revealed that cryptocurrencies are increasingly being used by criminals to launder illicit funds, making it harder for authorities to trace and recover stolen assets.
‘Strategic Analysis Report, 2024’ प्रतिवेदन सार्वजनिकhttps://t.co/GPwuNaW6wQ pic.twitter.com/d3f3XlyS7D
— Nepal Rastra Bank (@NepalRastraBank) November 17, 2024
According to the Unit, nearly 65% of fraud cases reported to authorities through May 2024 were linked to cyber-enabled crimes.
The report also pointed to a rise in fraudulent crypto investment schemes, where scammers reach out to potential victims via social media and online ads, promising high returns. Many of these scams go unreported due to the illegality surrounding crypto trading in Nepal, with victims often reluctant to approach authorities out of embarrassment or fear of legal consequences.
In response to this increasing threat, the FIU has called for enhanced scrutiny of cryptocurrency transactions and better training for financial institutions to identify suspicious activities. The unit also stressed the need for greater public awareness to prevent people from falling victim to scams.
The FIU’s recommendations include strengthening inter-agency cooperation, updating regulatory frameworks to address digital payment fraud, and fostering proactive reporting from financial institutions to curb the growing misuse of cryptocurrencies in illegal activities.
In a related development, India’s Financial Intelligence Unit (FIU) is also reviewing registration applications from four offshore cryptocurrency exchanges. While the specific platforms remain undisclosed, reports indicate that the country’s financial regulator could grant approval to two of these foreign-based exchanges to operate in India by March 2025.
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